Partisan bickering in India’s Parliament has stalled an important piece of Prime Minister Narendra Modi’s economic agenda: a constitutional amendment that would create a simplified nationwide tax system to replace a commerce-stifling patchwork of state levies. .... The winter session of India’s legislature ended Wednesday without a vote on the measure in the upper house, where Mr. Modi’s Bharatiya Janata Party is in the minority, after lawmakers spent weeks trading jabs over graft allegations involving top politicians. .....

“The economy suffers while politics overrides everything.”

..... Facing opposition protests and fearing a rural backlash ahead of the Bihar vote, Mr. Modi in August retreated from legislative efforts to ease India’s strict land-acquisition law and make it easier for the government to get land for industry and infrastructure. ..... The gridlock is the result, in part, of a tit-for-tat strategy by the main opposition Congress party, whose final years in power were marred by protests led by the BJP.

When Congress was in government, the BJP blocked tax legislation similar to what it is now trying to pass.

..... With major plans stymied in Parliament, Mr. Modi has sought to breathe life into the economy through executive actions and other moves, including a plan to revive heavily-indebted power-distribution companies and ease foreign-investment limits in some industries. .... Congress accused Mr. Modi of a political vendetta after the party’s president, Sonia Gandhi, and her son, Rahul, were summoned before a magistrate to answer a complaint alleging cheating and criminal breach of trust. ..... Emerging from court Saturday, Mr. Gandhi said Mr. Modi had encouraged “false allegations” to frighten political rivals. The government said it wasn’t involved in the case. The complaint was filed by politician Subramanian Swamy in 2012. He later joined the BJP. .....

‘Parliament has become a forum less for debate and more to settle political scores.’

—M.R. Madhavan, president of think tank PRS Legislative Research ...... A post on Mr. Kejriwal’s official Twitter account called Mr. Modi a “coward and a psychopath.” The episode spiraled to include corruption allegations by Mr. Kejriwal against BJP Finance Minister Arun Jaitley, who in turn filed a defamation suit against Mr. Kejriwal. ......

These much publicized spats narrowed the space for a political compromise needed to break the logjam on economic policy-making.

..... On the tax amendment, Congress has said it doesn’t support some key provisions. It argues the tax rate should be capped at 18%—and that number must be included explicitly in the constitution—to prevent a creeping increase by future governments...... It also wants to do away with a proposed 1% additional levy designed to help manufacturing states....... Mr. Jaitley said the government is willing to find ways to address Congress’s second demand, but won’t legislate the tax rate so future governments have flexibility.

India’s government is attempting to reform its messy web of sales taxes to make doing business across the country easier. ........ This complicated web snarls companies in red tape and slows down the transit of goods around the country because of border checks and other official inspections. ...... replace the patchwork of taxes with a single, nationwide sales levy, known as the goods-and-services tax, or GST.

Economists call the move an epochal lowering of commercial barriers.

..... a broad GST would deliver an immediate boost to output of 1% to 2% and lasting gains to productivity. .....

The bill needs the consent of two-thirds of Parliament and half of India’s 29 states.

Finance Minister Arun Jaitley wants the new system up and running by April 2016, saying it will “play a transformative role in the way our economy functions.” .......

States with large manufacturing bases have been wary of the GST: Receipts from the new tax would go to states where goods and services are consumed, not where they are produced.

........ The Modi government in December agreed to compensate states for lost revenue during the levy’s first five years, and to let them continue taxing alcohol and petroleum separately. Some experts say these and other possible exemptions would curb the GST’s effectiveness, however. ...... Jaitley told lawmakers on Wednesday that the standardized national rate for GST would be “much more diluted” than the 27% estimated